The Hidden Power of Family Mentoring: How Business Performance Can Improve After Passing the Baton

The leadership transition in a family business is never a minor event. Every succession brings with it risks of instability, loss of skills, and disruption of the balance between family and business. According to a new study (“Family CEO mentoring and post-CEO succession performance“) published in Strategic Entrepreneurship Journal by Fabio Quarato, Mario Amore (both from the Bocconi Department of Management and Technology), Maria Sanchez-Bueno and Fernando Muñoz-Bullón (both from Universidad Carlos III in Madrid) with Domenico Cambrea (University of Modena and Reggio Emilia), there is an often underestimated factor that can make a real difference in corporate balance sheets: mentoring of the outgoing CEO to the new family leader.

Family mentoring, much more than shadowing

At the heart of the study is the concept of “family CEO mentoring”—a temporary but at least one-year co-leadership between the old CEO (usually a parent or close relative) and the new, younger leader of the new generation. This shadowing generates a transfer of tacit knowledge, corporate values, and a culture of stewardship—that is, a willingness to safeguard the assets (not only economic, but also socio-emotional) of the company as a collective family heritage.

Analyzing 1,787 Italian family businesses that changed CEOs between 2003 and 2016, the researchers found that in companies where the old and new CEOs (both members of the controlling family) shared a period of co-leadership there was a +0.7-point increase in return on assets (ROA) in the four years post-succession. This is a significant increase in operating performance, in an industry where even variations of less than 0.5 points can be significant. However, this is not a widespread succession model, despite its effectiveness: only 7.1 percent of successions occurred under this system.

Where it works best: open boards and stable sectors

Family mentoring performs best in companies with “open” boards, where at least 30 percent of the members do not belong to the family. In these cases, the increase in post-succession performance is even bigger: the estimated coefficient rises to +2.2 percentage points, a sign that the presence of outside expertise reinforces the effectiveness of internal mentoring.

A final key variable is the turbulence of the industry in which the company operates. In highly volatile markets, the effectiveness of family mentoring is reduced to the point of being statistically insignificant. This is because the transmission of established values and knowledge is less useful in contexts where rapid adaptation and innovation matter more than continuity.

Why this study matters

The implications are strong: in a country like Italy, where a large number of businesses are family-controlled, investing in intergenerational mentoring can make the difference between a smooth transition and a governance crisis. Moreover, the study shows how the combination of family legacy and openness to outside expertise can become a powerful accelerator of growth.